Sales in the telecommunication (telecom) industry suffer from problems of generating significant profits due to substantial expenses required for advertising and labor, low customer retention rates, and high turnover rates in telecom company employees. Selling phones, such as wireless phones, is difficult, even for trained professionals. When a salesperson becomes successful, he is often promoted or becomes more involved with his customer care issues, which results in less time devoted to selling, and accordingly, less profits for the telecom company. Highly trained and highly paid experts are needed to service corporate accounts, which results in increased expenses.
In addition, it is difficult to generate sales when competitive products are very similar. For example, and in particular to wireless phones, the primary differences in products are the cost of the phone, the number of minutes per plan, the coverage area, or promotional accessories, such as batteries, cases, and battery chargers. These differences are insubstantial to most consumers, and telecom companies are frequently changing their programs and incentives in attempt to persuade potential customers. The fact that differences in telecom products are insubstantial is reflected in the high turnover rates in customers of companies. The customer turnover rates are high because it is difficult to prove that one particular product (e.g., wireless phone or service plan) or company is better than another.
Customers are also particularly aware of the issue of customer care or customer service. Companies with poor customer service typically have a difficult time retaining their customers.
One attempt to increase profits and decrease expenses in the telecom industry has been to reduce and/or eliminate the number of people involved in making a sale (e.g., disintermediation). Internet web sites have been developed to attempt to reduce advertising and labor costs. However, web sites have become ineffective because they do not attract enough potential customers to override the costs of spectrum acquisition, technology development, and advertising. An “effective” web site (e.g., a web site that generates more profits than the costs to develop and maintain the site) typically requires ongoing development and maintenance costs to streamline the process of ordering goods or services until a sufficient number of customers are familiarized with the products (i.e., goods and/or services) being sold. Because not enough people buy products through the web site, the web site becomes a substantial liability to the telecom company. Referral type incentives have been provided in attempt to increase the number of sales generated by a web site, but these incentives are ineffective because the credits and/or rebate promotions are self-limiting and do not create enough momentum in purchasing. For example, a customer may receive a sign-up bonus or benefit when he purchases a phone, but he will not continue to be rewarded during the length of his contract with the telecom company. Accordingly, the incentive is only as powerful as his own telephone needs.
Another major factor in selling a product is time decay (e.g., the time from the initial point of contact between a salesperson and a potential customer, or the time at which the potential customer is most interested in a product, until the time the potential customer actually purchases the product). Typically, too many negative distractions occur that reduce the likelihood of completing a sale. Examples of distractions include fatigue, lack of time to research and shop, hectic schedule, and no Internet connection. By the time a sales cycle is completed, ninety percent of the potential customers are no longer interested in purchasing the product. For example, if one person were to refer ten people to a web site of a telecom company, and if those ten referred people were later asked how many actually visited the web site, perhaps two or three people would answer that they had visited the web site. Of those twenty to thirty percent, perhaps one person would have proceeded to make a purchase from the web site. This results in only a ten percent efficiency in sales. Most people are not self-directed, and typically require “hands-on” guidance in order to follow through with a potential purchase.
Telecom companies have begun to realize that personal contact and “hands-on” approaches may be a more reliable method of generating profits than mere referral to a web site. Accordingly, these companies have begun developing relationships with multi-level organizations, hoping that word of mouth sales will stimulate sales. Unfortunately, if one were to research the potential sales, they would determine that the major buyers of such telecom products are the distributors themselves, and not the people outside of the distributor network. Consequently, this method is also self-limiting because one has to be a distributor to benefit from the program. Frequently, a sign-up fee adds to the initial cost before any purchasing benefit becomes a reality. The sign-up fee often becomes a major friction point for any potential distributor. In addition, there is a stigma attached to multi-level sales or marketing, and it is typically too difficult and complicated to succeed in selling the goods or services. Typically, distributors are unable to sell beyond their own networks. In addition, very few distributors have the capability or knowledge required to either answer questions about the technology built into the phone, or to explain the benefits of one product over another since no significant difference exists between the products, as mentioned above.
To address problems of retention, telecom companies typically require annual contracts for new customers. The contracts often impose a severe penalty on those customers who cancel the contract early. As a result, the annual contracts create a substantial friction between the telecom company and the customer.
As the third generation (3G) mobile telecommunications system (i.e., universal mobile telecommunications system) is developed and begins to enter the marketplace, the need for a marketing plan that effectively promotes a company's product will dramatically increase if the company wishes to acquire or maintain a significant portion of the market. In addition, in order to maintain a viable customer base when 3G products enter the market, companies will need to ease the transition of their existing customers over to the new type of communication devices and services.
Thus, there remains an unmet need for methods of increasing sales of telecommunication products, decreasing expenses associated with selling the products, and for retaining current customers.